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A Business Intelligence Perspective for

Churn Management
ARTICLE in PROCEDIA - SOCIAL AND BEHAVIORAL SCIENCES JANUARY 2014
DOI: 10.1016/j.sbspro.2013.12.420

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Rajiv Gandhi Indian Institute of Manag
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Procedia - Social and Behavioral Sciences 109 (2014) 51 56

2nd World Conference On Business, Economics And Management -
WCBEM 2013

A Business Intelligence Perspective for Churn Management

Hergovind Singh a, Harsh Vardhan Samalia b *
a

Assistant Professor,Maualan Azad National Institute of Technology, Bhopal, Madhya Pradesh, India
b
Assistant Professor,Rajiv Gandhi Indian Institute of Management, Shillong,Meghalay, India

Abstract
This study looks into the issue of Churn faced by various competitive industries (like telecom) from the perspective of Business Intelligence (BI).
The presented work with the help of existing literature on BI takes into consideration the benefits of deploying a BI system for churn
managrment. Sub-objective of this work also includes suggesting a conceptual framework for handling churn with the aid of a BI system. As
large numbers of Business Intelligence systems are not able to meet the expected benefits associated with them, it calls for taking into account
several intangible benefits along with the tangible ones. The way BI systems can assist in churn management in-line with the business strategy of
the firm can enhance the strategic value of both tangible and intangible assets manifold times thereby providing a whole new dimension to
organizations value chain.

2014 The Authors. Published by Elsevier Ltd.

Selection and peer review under responsibility of Organizing Committee of BEM 2013.
Keywords: Business Intelligence, Churn Management, Employee Retention, Customer Satisfaction;

1. Introduction
Todays dynamic business environment has escalated the need for understanding the importance of one of the
most valuable and volatile intangible asset residing in the firm Knowledge. Knowledge, which is also considered
fifth factor of production in current economy and its generation play critical roles in a firms competitive advantage
and economic performance (Barney, 1991; Grant, 1996; OECD, 1996). People are considered to be most critical
entity for any organization; be it customers or employees. The longer they (people) stay with the organizations better
is the probability of success. Thus, it becomes pragmatic to prevent the attrition of people by managing the churn of
both customers and employees. Organizations attempt to use knowledge in order to renew their competitiveness
(Chase, 1997) for managing churn of customers and employees. Business Intelligence is a system that turns data into
information and then into knowledge thereby adding substantial value to firms decision making processes (Loshin,
2003). Shortened business cycle in present hypercompetitive business scenario has heightened the BIs role for
having faster and more informed decision making (Turban et al., 2008) and churn management.
2. Business Intelligence and Churn Management
BI encompasses the whole decision spectrum, ranging from strategic decisions, through tactical decisions, to
operational decisions (Taylor & Raden, 2007); in-spite of this in literature a universally accepted definition of BI is

* Corresponding Author: Dr. Harsh Vardhan Samalia. Tel.: +91-364-239-8003

E-mail address: hvs@iimshillong.in

1877-0428 2014 The Authors. Published by Elsevier Ltd.

Selection and peer review under responsibility of Organizing Committee of BEM 2013.
doi:10.1016/j.sbspro.2013.12.420

52

Hergovind Singh and Harsh Vardhan Samalia / Procedia - Social and Behavioral Sciences 109 (2014) 51 56

hard to find (Negash, 2004). This can be attributed to the fact that different software vendors and consulting
organizations have defined Business Intelligence as per their need to suit their products (Arnott & Pervan, 2005, p.
71). Few major definition of BI are given in the table I below:
Table I: Few Major Business Intelligence Definitions
Definition
The process of gathering and analyzing internal and external business information.
BI is an architecture and a collection of integrated operational as well as decision-support
applications and databases that provide the business community easy access to business data.
Information to better understand business and to make more informed real-time business decisions.

Author(s)
Okkonen et al., 2002
Moss & Atre, 2003;
Papadopoulos & Kanellis (2010)
Raisinghani, 2004

An organized and systematic process by which organizations acquire, analyze, and disseminate
information from both internal and external information sources significant for their business

Lonnqvist & Pirttimaki, 2006

activities and for decision-making.

Business Intelligence (BI) is technologies and applications employed in use of several financial /
non-financial metrics / key performance indicators to assess the present state and deciding future

Hari Misra, 2007

course of action for business.

BI means leveraging information assets within key business processes to achieve improved business
performance.
Business Intelligence (BI) refers to various solutions for enhancing the overall business performance.
BI is the conscious, methodical transformation of data into new forms to provide information that is
business-driven and results-oriented.
BI is a set of business information and business analyses within the context of key business processes
that lead to decisions and actions.

Williams & Williams, 2007

Wang & Wang, 2008
Ranjan. J, 2008
Popovi, Turk, Jakli, 2010

An effective business intelligence system not only aids in increasing the quality of strategic and operative
planning but at the same time reduces the time used for decision-making by improving the various information
processes and information quality (Hannula and Pirttimki, 2003).
2.1. Benefits of Business Intelligence
A major topic in BI research for both practitioners and academicians that still remain relevant has been costbenefit analysis of BI system as it is relatively easier to determine the costs but difficult to define the benefits of BI
as benefits are majorly intangible in nature (Lonnqvist & Pirttimaki, 2006; Turk et al., 2006; Williams & Williams,
2007; eki & Mladenovi-Ranisavljevi, 2010). Majorly, IT investment in the past has been oriented towards
improving operational efficiency as it was considered necessary at that time but the fact remains that these
organizations still remains data-rich but information-poor (Williams & Williams, 2007; Davenport & Short, 2003;
Dewett & Jones, 2001; Forslund, 2007; Gibson et al., 2004; Williams, 2004b).
Deploying BIS consumes considerable amount of resources and at the same time its wide applicability in both the
internal and external business environments presents organisations with numerous benefits, makes it imperative to
evaluate both tangible and intangible benefits before a BI project is undertaken Wu (2000). Table II given below list
some major benefits observed by a firm after deploying BIS:

Hergovind Singh and Harsh Vardhan Samalia / Procedia - Social and Behavioral Sciences 109 (2014) 51 56
Table II: Major Benefits from Business Intelligence
Major Categories of Benefit
Faster and more accurate business reporting

Author(s)
Pellissier

&

Kruger.

(2011);

eki

&

Mladenovi-

(2010);

eki

&

Mladenovi-

Ranisavljevi (2010).
Improved decision-making process

Hoevar

and

Jakli

Ranisavljevi (2010); Carver and Ritacco (2006)

Improved customer satisfaction

Hoevar and Jakli (2010); Carver and Ritacco (2006); Atre &
Moss (2003)

Reduction in costs

Carver and Ritacco (2006); Atre & Moss (2003)

Increase in revenue

Carver and Ritacco (2006); Atre & Moss (2003)

Improved Quality of Information and Communication

Popovi, Turk and Jakli (2010); Yeoh, Koronios & Gao

Increase in market share

Atre & Moss (2003)

(2008); Hari Misra (2007); Carver and Ritacco (2006)

Apart from the above mentioned benefits there are number of studies and frameworks that attempts to justify
investment made on Data Warehousing (an important technological element of BI) presenting possible sources of
benefits for such investments (Watson and Haley, 1998; Watson et al., 2002; Sentry Market research and IDC study,
Power, 1997). Further, payback of data warehousing investments ascends from new or improved business processes
enabled by the data warehouse project itself (Taub, 1999). The main categories of business intelligence benefits
should be liked to business strategy in order to achieve strategic objectives of the firm (Hoevar and Jakli, 2010).
2.2. Churn Management
One of the most talked about BI benefit in literature has been improved customer satisfaction (also supported by
table II above). Customer satisfaction is defined as a customers overall evaluation of the performance of an offering
to date (Johnson and Fornell 1991). This overall satisfaction has a strong positive effect on customer retention across
a wide range of product and service categories, including telecommunications services (Fornell 1992; Fornell et al.
1996). As an overall evaluation that is built up over time, satisfaction typically mediates the effects of product
quality, service quality, and price or payment equity on loyalty (Bolton and Lemon 1999; Fornell et al. 1996). For an
industry like telecom industry which is prone to high churn rate, overall customer satisfaction has a positive effect
on the duration of the relationship for telecommunication customers (Bolton, 1998) as well as usage of
telecommunications subscription services by the customer (Bolton and Lemon, 1999). With India adopting the
mobile number portability in case of mobile telecom services from year 2011, all telecommunication service
providers have witnessed a sharp change in the churn rate. Churn, which is often used synonymously with attrition,
has been described as annual turnover of the market base (Strouse, 1999) in context to customers while in
employees context it is more closely linked with their retention. Employee Retention has been defined as the ability
to hold onto those employees you want to keep, for longer than your competitors (Johnson, 2000). Analysis of
employee retention becomes altogether more important as its influences can be felt at multiple levels (Klein et al.,
1994; Klein and Kozlowski, 2000; Raudenbush and Bryk, 2002; Yammarino and Dansereau, 2004).
In a world where technologies, processes and products are quickly duplicated by the competitors, while at the
same time pace of change and level of competition are constantly increasing, it is becoming progressively difficult
to keep ahead in the race. One solution is to make sense of the available data to arrive at most reliable sources of
advantagebetter service, increased responsiveness, stronger customer relationships, employee satisfaction and
innovation that can keep a company one step ahead of its competitors always. The problem is in this information age
many industries are facing the problem of Data Deluge (The Economist, Feb 25, 2010) which makes role of BI
system far more significant to the business world than ever before. The presented work attempts to provide a
framework for managing churn with the aid of business intelligence system keeping in view two very important

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Hergovind Singh and Harsh Vardhan Samalia / Procedia - Social and Behavioral Sciences 109 (2014) 51 56

entities of business in focus: customers and employees. Further research can be taken up to empirically validate this
presented framework in an industry of choice and authors suggest Indian telecom industry for the same. The reason
for suggesting Indian telecom industry is based on the fact that with adoption of mobile portability in 2011 and
concept of free roaming soon to be embraced by the said industry is going to put tremendous competitive pressure
on Indian telecom players. Study can be taken up to look at the effect of business intelligence system maturity on
churn management.
2.3. Maturity Models and Business Intelligence Systems
Usually, generic maturity model assumes that progress comes in stages, ultimately reaching an end goal. For the
study purpose, how BIS evolve from a low-value, cost-centre operations to high-value, strategic utilities that drive
market share in terms of BIS maturity model can be taken into consideration (TDWI, 2005). In literature one can
find number of BIS and /or BI maturity models (TDWI, 2005; Williams & Williams, 2007) infact Rajteri (2010)
has conducted analysis of six major BIS maturity models. Maturity model perspective of BIS provides organization
with an instant update on the status and the perspectives of their BIS initiative. For the presented work, widely
accepted six-stage BI maturity model given by the TDWI institute (2005) (Table III below) has been taken into
consideration as it provides sound basis for BIS maturity assessment albeit the major limitation being that it
provides this from technical viewpoint only (Rajteri, 2010).
Table III: Six stages BI Maturity Model (Adopted from TDWI, 2005)
Stage

Architecture

Analytics

Parental

Reporting

Paper Report

Infant

Spread arts

Briefing Book

Child

Data Marts

Interactive Report

Teenager

Data Warehousing

Dashboard

Adult

Enterprise DW

Cascading Scorecards

Sage

Analytical Services

Embedded BI

Business Intelligence by means of its analytics prowess offers business professionals in both marketing (for
loyalty based programs) and human resource domain to consolidate and monitor the various facets of two most
important entities for business viz customers and employees along with their linkages to business (Custis, 2012).
Persuasively, true business value of business intelligence systems lies in improvised business processes and
enhanced firm performance (Popovi, Turk and Jakli, 2010). Business professionals can use BI system strategically
by deploying the same for long impacting moves like new product development; customized offers to huge number
of customers, uunderstanding employees job profile in accordance with minority categories and business areas,
better talent acquisition and numerous other benefits. The framework given below elaborates how BI system can
help businesses in their quest of obtaining strategic advantage over their competitors.
By accessing accurate, timely, comprehensive data from BI systems comprehensive analysis can be carried out for
whole business very quickly which results in faster and better decision-making. Its important to note that BI
systems are technology only until they are seamlessly integrated into the business thinking (Custis, 2012) by the top
management. To be effective enterprise wide, the BI implementation shall be driven by the top management (eki
& Mladenovi-Ranisavljevi, 2010).

Hergovind Singh and Harsh Vardhan Samalia / Procedia - Social and Behavioral Sciences 109 (2014) 51 56

3. Conclusion
Business Intelligence empowers businesses to tap opportunities and tackle threats on a proactive basis rather than
reactive basis. In current hyper-competitive scenario a manager must not be limited by administrative issues but
shall take into cognizance a fact-based systematic approach to solve business problems while at the same time
offering a longer-term viewpoint in order to cope up with the fast paced environmental changes. The key task of
business professional is to proactively produce solutions to strategic business issues facing the ones organization. In
this quest of managers, BI system provides a vital aid to these already hard pressed professionals. While going for
cost-benefit analysis of a system like Business Intelligence an organization must take into account numerous
intangible benefits along with the tangible ones and the mode in which BI system strategically benefits the
organization (Papadopoulos & Kanellis, 2010; Custis, 2012). Failure to do so will hugely undermine the book value
of BI system when in reality the picture can be upside down. The way BI system can assist in churn management
in-line with the business strategy of the firm can enhance the strategic value of both tangible and intangible assets
manifold times thereby providing a whole new dimension to organizations value chain.

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